Over the last 11 months, natural gas prices have dropped a whopping 73 percent, according to Bloomberg.com. This drop is the sharpest among the 24 commodities in the S&P GSCI Commodity Index. Simultaneously, stockpiles of natural gas are running 22 percent higher than the five-year average. The result is that crude oil now costs 18 times more than natural gas, a whopping multiple that hasn’t been seen since 1992.
As Bloomberg reporter Margot Habiby pointed out:
As the economy slowed, demand from factories and power plants, the users of 58 percent of all natural gas, declined. By April, prices touched a six-year low of $3.155.
“Fundamentals are holding gas down, and crude oil is trading less on fundamentals and more on consumer sentiment and perception,” said Steven Schork, president of Schork Group Inc. of Villanova, Pennsylvania, an energy-trading consultant. “We have a disconnect between the two, and there is no expectation in the near term to see these two re-link.”
The abundance of clean-burning, domestic natural gas is one of the lynchpins of the Pickens Plan.
Speaking at the Great Hall of the Clinton Presidential Center in Little Rock earlier this week for the Frank and Kula Kumpuris Distinguished Lecture Series, Boone Pickens said:
“The only way we can compete against a rising oil price is to get on natural gas for a transportation fuel.”
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